The Australian real estate agent Huaxin Realty and well-known developers have torn up! The reason for the split was that developers Metro Property Development owed more than A $4 million in commission on flat sales.
So real estate agent Huaxin will sue it, and developers will default on this 4 million because developers believe Huaxin default, so they do not want to pay these sales commission.
It is understood that Huaxin mainly sells apartments in Sydney, Melbourne and Brisbane. Huaxin defaulted 20% to 25% of the seven projects in Brisbane, while the developers passed on responsibility to them and withheld commissions.
These seven projects are an important part of Huaxin`s sales, and this commission is a very important revenue.
Both sides have agreed to a 6 percent commission on sales of seven new apartments in Brisbane, such as the Brisbane Casino Tower (BCT), Canterbury Tower and the Newstead Tower, although the settlement period for several new apartments, except for BCT, is already over.
Although the developer has paid the first part of the commission to Huaxin, it has withheld most of the commission on sales of completed apartments and plans to pay it only after it has resolved its default.
It is understood that the developer and Huaxin are in accordance with the "industry standard" contract, some commissions are paid after the down payment, the rest is paid at the final settlement.
But Huaxin said: this approach is unfair, the default caused by Huaxin is not a simple default in the commercial sales. As a result of banks` massive refusal to lend, many local and foreign buyers have to give up buying.
(Newstead tower developed by developer Metro Property Development in Brisbane)
Another reason for the default, Huaxin said: the loan was rejected.
The reason is that apartment valuations have fallen by 25%. For example: BCT Building, a 60-square-meter two-way apartment, has recently been valued at A $ four hundred and sixty thousand, down 20 percent from its previous A $ five hundred and seventy six thousand price.
Alvin Tan, head of Huaxin Brisbane, said:
"you can`t say it`s caused by the agency`s failure to assess the ability of buyers to settle, and we can`t control the bank`s lending policy or the decline in valuations, so it`s unfair to wait until all the deals are done before you get a commission.
We have tried our best to assess the financial situation of the buyers, but we can only do what we can according to the sales situation at the time. "
At the moment, Huaxin is actively reselling defaulting apartments and says it should at least pay commission on apartments that have been traded, rather than withholding money on its own
The opener also said: face Huaxin`s lawsuit will also carry on the counterclaim to this! Huaxin breached the agreement and demanded far more money than it owed
(developer CEO Luke Hartman)
Luke Hartman, chief executive of developer Metro Property Development, said: "We are very willing to pay the appropriate amount payable and we have a dispute with Huaxin over the payment of funds, and the issue has now been brought to court."
"it`s standard industry practice for developers to get commissions only when the final deal is completed, not at the stage of the swap contract, where no developer or landowner will pay the commission."
The developer, which has built more than 3000 apartments in Brisbane over the past seven years, has helped support some of the Newstead Towers and Brisbane Casino Towers projects, as well as Alceon, a private lender that funded developers` Sydney projects.
However, according to some marketing experts, the industry standard usually involves two parts of commission payments, depending on the specific contract.
Developers reportedly said customers had defaulted on the projects, but did not provide details, except that "80 apartments have not been sold."
With the current tightening of bank lending, exposure by the Royal Bank Commission to the adverse effects of the incident, oversupply of apartments and a downturn in the housing market have led to a series of consequences.
Especially in Sydney, Brisbane and Melbourne, major cities such as sales defaults were the worst affected.
The relationship between developers and agents is generally good, but this dispute between developers and agents, can be counted as the performance of the entire Australian real estate industry struggle.
Whether Huaxin and developer Metro Property Development, who wins, who loses, will have an adverse impact on the entire real estate market.
